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Is Bankruptcy A Good Option After Identity Theft?

The Bureau of Justice Statistics reports that there were approximately 17.6 million Americans affected by identity theft in 2014. That is a sharp increase from the 3.6 million affected in 2004. With the rise in technology, identity theft will continue to be a growing problem. If you have been a victim of such a crime, you have no doubt felt the stress and anxiety that accompanies identity theft. You may have even wondered if bankruptcy would be the best option in order to dig yourself out of the hole that some stranger, a criminal, put you in.

The Next Steps

Dealing with identity theft is scary. It can be difficult to know where to begin. If you have been victimized, whether you choose to file for bankruptcy or not, you need to start with the following steps to start sorting out the situation.

Cultivate Patience. Resolving issues with identity theft takes a long time and you will need to commit to a couple hours per day working on the details.

Obtain Your Credit Reports. You will need to see your credit reports from Experian, Equifax, and Transunion in order to examine them for fraudulent accounts.

Place Fraud Alerts. You need to alert each of the credit reporting agencies that you’ve been a victim of identity theft and this will let future creditors know you are an identity theft victim.

Dispute Fraudulent Accounts. If you see fraud on any of your three credit reports, then you need to dispute such accounts with each of the credit agencies showing fraudulent accounts.

File a Police Report. You will need the police report when you begin disputing the fraudulent accounts. This only takes a few minutes and you should obtain 10 copies of the police report.

Complete a Fraud Affidavit. Creditors whose accounts are being challenged will require a notarized fraud affidavit. You can ask the creditor to send you one or you can obtain a form online.

Call Your Creditors. Keep a call log of every person you talk to. Make a note of what documents are requested and which documents they have received. Follow up with your creditors on a weekly basis.

Contact Your Legitimate Creditors. Once you have success with fighting the fraudulent accounts, start contacting your actual creditors. Doing so may bring positive results when your creditors are willing to work with you on payments. Although late payment strikes probably won’t be erased, you might be able to work out a payment arrangement or lower your credit card interest rates.

You can visit this website to read more about the initial steps to take if you’ve been a victim of identity theft.

If you decide that bankruptcy is the best option to get out of debt and avoid the daunting task of repairing your credit, then you should know that filing for bankruptcy does have negative consequences.

Bad Credit. Bankruptcy is one of the most serious negative strikes you can have against you. Unfortunately, future creditors and even employers will disqualify an individual if they have a bankruptcy on their record.

Compromised Loan Eligibility. If you have a government-backed loan for a mortgage, you are not required to include that in the bankruptcy. However, you will not be eligible for another government-backed loan until your current loan is paid in full.

Moratorium on Bankruptcy. After debts have been discharged in bankruptcy, an individual cannot file for another discharge for several years.

Although there are many negative aspects to filing for bankruptcy, there are some benefits. In doing so, you can start fresh to rebuild your credit. It takes time, patience and persistence, but it can be done. You also will not be stressed every time the phone rings because it will not be a creditor trying to collect. For more information on the consequences of bankruptcy, you can go here. Always consult an experienced attorney familiar with bankruptcy law to help you make informed decisions and determine the proper steps to take.